Hirose News|February 6, 2012 9:00 AM

FX Weekly Update


The US unemployment rate dropped to 8.3% after nonfarm payrolls rose by 243,000 (significantly more than the anticipated 150,000); USD strengthened against the Yen from 76.20 to 76.73 which seemed to indicate less strength in the greenback.  This may have been in part due to dollar forward selling of Japanese exporters ( actual demand).

Recent NFP increases and the continued smooth downtrend of the unemployment rate appears to show that the US economy continues to gradually accelerate.  This, however, may be premature and one will need to wait till QE3 to get reassurance of this economic data.

The " justify exceptional low interest rate until at least late in 2014 "  in the FOMC declaration of January 25 clearly makes  the UD dollar top side very heavy.

Japan's Minister of Finance, Mr. Azumi recently commentated on foreign exchange intervention...." the background behind an advancing strong yen looks like a speculative movement " ;  the inference is for further market intervention but it is doubtful if he can intervene in a gently trending market.

The US stance on intervention is clearly to do nothing as confirmed by Assistant Secretary Collins of on November 7 2011. He mentioned that he did not recognize a chaotic movement and an excessive change in the FX market.

Also, the United States mentioned it did not  support Japan's foreign exchange intervention last August and October.

It is clear that there is no good  excuse for Japan  to push up Dollar/Yen lebel higher by intervention in such a quiet and narrow trading range recently even though the Dollar/Yen is very close to the it's historical lows.

The 'sell on rally' stance will be continued this week. The expected range is 75.50-77.00  


Over 3 days have passed since debt swap negotiations of Greece were said to have been settled and yet no real agreement has been reached.  The Minister of Finance meeting of 17 countries in Brussels will be held on February 6, discussing the second round support of Greece but continued doubts look set to weigh on the markets this week.

Medium and long term trend of the Euro still looks like a down trend with selling on any rally to continue.

Expected range 1.3000-1.3280  

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